Warren Presses DOJ and Treasury Over Potential DeFi Exchange Probe

U.S. Senator Elizabeth Warren (D-Mass.) has sent a letter to Treasury Secretary Scott Bessent and Attorney General Pamela Bondi inquiring whether their agencies are actively investigating national security risks associated with decentralized finance (DeFi) platforms, specifically highlighting decentralized exchanges like PancakeSwap.

Dated December 16, 2025, the letter expresses concerns that DeFi’s permissionless nature—lacking robust know-your-customer (KYC) and anti-money laundering (AML) controls—could enable terrorists, criminals, and sanctioned entities, including North Korea, to launder funds and evade sanctions. Warren cited blockchain analytics from firms like Allium and TRM Labs, noting PancakeSwap’s alleged role in laundering portions of stolen funds from major hacks, such as the $1.4 billion Bybit theft earlier in 2025.

The senator also raised potential conflicts, pointing to reports that PancakeSwap has promoted trading of USD1, a stablecoin linked to World Liberty Financial—a crypto venture associated with President Donald Trump and his family. Warren questioned whether any “improper political influence” from the administration could affect enforcement decisions.

This inquiry comes amid stalled congressional efforts on crypto market structure legislation, where DeFi regulation remains a key sticking point. Warren emphasized the need for clarity on enforcement as lawmakers debate rules to curb illicit finance in decentralized protocols.

Industry advocates argue that on-chain transparency aids tracking legitimate activity and that heavy-handed probes risk stifling U.S. innovation. The agencies have until January 12, 2026, to respond.

As global regulators grapple with DeFi’s challenges, Warren’s push underscores ongoing tensions between innovation, security, and oversight in the rapidly evolving crypto sector.